Core lesson
Supply & Demand Shock Lab
Track how technology, policy, and logistics shocks shift supply and demand schedules across advanced economies.
What you will learn
- Differentiate between movements along versus shifts of curves
- Model simultaneous shocks and partial equilibrium outcomes
- Estimate short-run versus long-run elasticities with live data
Start with a real question
When egg, gasoline, airline-ticket, or rent prices jump, did demand move, supply move, or did quantity move along a curve?
Core concept
Demand and supply curves summarize willingness to buy and sell at each price. A change in a non-price driver shifts a curve; a price change moves along it.
Cause→Economic mechanism→Observed outcome
Data connection
Export growth helps illustrate outward shifts in aggregate demand for tradables.
Exports of goods and services (annual % growth) · NE.EXP.GNFS.KD.ZG
Worked example
Step through it
If an input shortage reduces supply while travel demand rises, equilibrium price increases for both reasons. Quantity is ambiguous because the demand shift raises it while the supply shift lowers it.
Mini practice
- Classify a fall in coffee demand after tea becomes cheaper.
- Predict price and quantity after a crop failure.
- Why does a higher market price not itself shift demand?
- Demand for coffee shifts left because tea is a substitute.
- Supply shifts left: price rises and quantity falls.
- Own price is already represented on the curve, so it causes movement along demand.
Common mistake
Calling every price change a shift of the curve.